Professional Statement lends weight in contentious area of service charges

12 November 2018

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The RICS (Royal Institution of Chartered Surveyors) has issued a new Professional Statement for Service Charges in Commercial Property. This sets out best practice for the management and administration of service charges and includes nine mandatory requirements that which RICS members and RICS-regulated firms must comply with. It supersedes the previous Codes of Practice which provided guidance on good practice and becomes effective on 1 April 2019.

Members who depart from the mandatory requirements may only do so for justifiable circumstances, albeit the RICS does accept an element of proportionality i.e. the extent to which the recommended best practices are complied with will depend on factors such as the size, nature and type of property and the level of service charge expenditure.

Although the Professional Statement cannot override the terms of a lease it aims to promote best practice, uniformity, fairness and transparency in the management and administration of service charges in commercial property. It aims to ensure timely issue of budgets and reduce causes of disputes. It provides guidance to solicitors and property managers in the negotiation, drafting, interpretation and operation of commercial leases. There are nine mandatory requirements supported and underpinned by a list of core principles and best practice guidance.

Philip Angell, Director of Property Management at Cooke & Arkwright said, “Although the Professional Statement carries more weight that the Codes of Practice it replaces, its requirements are not a radical shift and if adopted by owners, managing agents and tenants it should help alleviate the cause of many disputes in this often contentious area.”